Filing personal bankruptcy without losing my business

February 11th, 2015 by Questions

If I am the sole principal for a construction corporation which employs 15 plus people but with no assets and I elect to file for bankruptcy for personal reasons only. I have been told I cannot be the principal of the company while in personal bankruptcy and would have to either appoint someone else the principal or close the company. If I was to remove myself as the principal and assign it to my son or daughter who also work there what issues could result from this. Also can the creditors including the CRA try to obtain money from the corp that is payable to existing subcontractors for on going or new projects.

Posted from: Ontario

Questions

One Response to “Filing personal bankruptcy without losing my business”


February 12, 2015 at 9:15 am, Doug Stuive, CA | Trustee | CIRP said:

There are many factors that affect what can happen when a person declares bankruptcy and they are the director of a corporation. In general, you will not be able to maintain your current position as director of the company. You may remove yourself as director and appoint another party to operate the business. This would not prevent the trustee from having an interest in the corporation as I have assumed you own all the shares, but would allow the corporation to continue operating.

Your Trustee will have to be given access to the books and records of your corporation. They will specifically be looking at what the value of the shares are and whether any funds from that corporation are owed to you. For example, are you a shareholder of that corporation and did you advance any funds? As your bankruptcy trustee they step into your shoes and there may be funds within the corporation that they can rightfully recover for the general benefit of your creditors.

Once you file for bankruptcy you are legally protected from collection activity, even from the CRA so they would not be able to attach themselves to the corporation’s bank accounts for your personal debt. If the corporation owes CRA, your personal bankruptcy will not preclude CRA from taking action against the corporation.

During a free consultation if you were to bring your financial statements the trustee would be able to provide you with more specific advice and information about how your personal bankruptcy would affect your business.

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